Senator MARSHALL (Victoria) (19:33): I rise to speak today about worrying developments within the Australian banking industry. Traditionally at least, bank lending provided civic benefits that went further than the simple provision of credit, but modern banking practices have since undermined much of the social utility that Australian banks once provided. The unfettered pursuit of market share by our banks has led to unhealthy practices focused on increasing private debt.

Prospective borrowers, who have traditionally looked to the banks for financial advice, must now be more cautious than ever as many bank workers are paid commissions on the sale of bank products. Meanwhile, we see unsolicited mail offering pre-approved credit cards to the unemployed and other financially vulnerable Australians. It is clear from this behaviour that the big four banks are abandoning their prudential standards and reneging on their social contract. At its extreme, it is this kind of behaviour that has led to the US subprime mortgage crisis.

Australia's big four banks now control more than 75 per cent of bank assets between them. Furthermore, modern payroll systems mean that, even before loans are taken into account, bank account access is essential infrastructure. There is something to be said for individuals having the right to make their own financial decisions, but in practice the oligarchic nature of the Australian banking industry is such that Australians have little choice. In this atmosphere, Australians are right to expect their government to represent their interests, despite the industry's protests. The arguments that banks make against government intervention in their sector would carry a lot more weight if they were applied universally. But the eagerness of the big four to take advantage of the govern­ment's bank deposit guarantee shows that this is not the case.

Australia's big four banks need to understand that if they cannot be trusted to regulate themselves, if they abandon their societal obligations in the pursuit of insatia­ble avarice, they are inviting increased government regulation. And let me tell you, despite what many in the Liberal Party might have you believe, well-informed bank customers in Australia are far more concerned about moral hazard than they are about sovereign risk.

I believe in a strong Australian banking industry. I want our banks to be healthy and to make profits, but I find it hard to sympathise with banks that cry poor when their combined profits exceed $24 billion, as was the case in 2011. In the context of these figures, it simply does not stack up when banks say that they are unable to pass on Reserve Bank interest rate cuts in full or that they are sending Australian jobs offshore out of necessity. It is also worth noting that the combined income of the chief executives of the big four banks was over $28 million in 2011.

But it is really this point that has moved me to speak today: 3,300 Australian jobs were cut by the big four banks last year and another 7,000 are expected to go in 2012. I understand that the banks, like other companies, have an obligation to their shareholders to make profits. I have some sympathy for this view. After all, bank investments provide a significant source of income for many of Australia's self-funded retirees and, as the banks are quick to point out, many more Australians benefit from bank profits indirectly through their superan­nuation. But a company's responsibilities to its shareholders extend beyond the provision of dividends and capital growth; they include a responsibility to conduct business in a manner that the shareholders approve of. Perhaps I have a little too much faith in the goodness of human nature, but I just cannot see these investors—these mum and dad investors that the banks like to tell us about—wanting to send Australian jobs offshore, and I am certain that these mum and dad investors would not approve of these workers being forced to train their overseas replacements before being sacked. That is what is happening in banks today. It is appalling. This kind of treatment is not just a matter of finance; it is a matter of respect. It is not enough for these callous financial leviathans to simply sack their loyal staff. Instead they wring out their last shreds of dignity before sending them on their way. It defies belief that they have the nerve to do this during a period of ongoing record profits.

Thankfully, there is one bank amongst the big four that has committed to retaining Australian jobs. The Commonwealth Bank, set up by the Fisher-led Labor government just over a century ago, has a stated policy against the offshoring of Australian jobs and deserves to be commended for this fact. It begs the question: if the Commonwealth Bank can afford to keep jobs in Australia whilst maintaining record profits, why are hundreds of Westpac employees expected to lose their jobs this year? If smaller lenders like Members Equity and Bendigo Bank can keep jobs in Australia despite having less access to low-interest loans on international money markets, why will hundreds of ANZ's Australian employees be made redundant this year? Why are big Australian banks pursuing this strategy when their return on equity greatly exceeds that of their major international competitors?

Australia's banks, which share their risk with the Australian public and which turn to the Australian government to support them in times of uncertainty, have a responsibility to employ Australian workers, many of whom support the bank industry with their mortgages. And this is really what is missing here: the acknowledgement that, surely, banks have an obligation to the people they make their extravagant profits from, the people who may well be left carrying the can in the event that we ever have a mortgage crisis of our own.

When the Commonwealth Bank was first established by the Labor Party, it was partly in response to unbearable industry greed of the day. Despite the protestations of industry spokespeople, the fact remains that there are many features of the banking sector that differentiate it from other industries and make it worthy of special consideration by the government. Only recently, the govern­ment has passed legislation to allow greater freedom for Australian bank customers who have previously been locked into financial arrangements with unfair exit fees. It is my hope that Australians will take advantage of this new freedom to support their community and not just buy Australian but bank Australian.

Last week I chaired a committee hearing for an inquiry into the exploitation of outworkers in Australia's textile, clothing and footwear industry. In this hearing I pointed out that had the industry been responsible enough to police themselves in the first place the government would not need to consider increasing regulation or changing laws. Australia's banks should heed this lesson and acknowledge that just as clothing manufacturers have an obligation to the workers that are exploited for their gain the banks have a reciprocal obligation to the Australian society they depend on and that supported them through a time of financial crisis. If the banks are truly concerned about preventing further government intervention in their industry sector then they would be well advised to desist in their blinkered race to the bottom. The immediate termination of offshoring practices would make a good start.